There's no harm in principle in categorizing music, or anything else, into genres, even though we may argue endlessly about what constitutes a genre, or what fits into it. The sad thing is that the argument often seems to be endlessly combative, like sects and sub-sects of a particular religion bickering over the One True Way.

The fact is that no music is conceptually "better" than any other and, in the end, all that matters is that you/we the players play what we want to play and that you/we the listeners listen to what we want to listen to. Hopefully, the two things occasionally coincide!

But, within Bob's area of folk music - and any other area of music - his words about there being three kinds of music are essentially valid.